North Carolina does not tax Social Security benefits
If you receive Social Security retirement, survivor, or disability benefits and live in North Carolina, you will not owe state income tax on those payments. North Carolina is one of the states that excludes Social Security income entirely from its state tax calculation. This means you do not report your Social Security benefits on your North Carolina state tax return, even if you file a federal return.
This exemption applies whether you receive benefits as a retiree, as a surviving spouse or child, or as a disabled worker. The amount does not matter — North Carolina excludes all Social Security income from taxation. If you also receive other income (wages, pensions, interest, or rental income), you may still owe state tax on those sources, but your Social Security portion stays untaxed at the state level.
Key Takeaways
- North Carolina does not tax Social Security benefits at the state level, regardless of how much you receive or your total income.
- You do not report Social Security income on your North Carolina state tax return, though you may still file if you have other income sources.
- Federal tax rules are separate — some people with high combined income must report Social Security on their federal return, even though North Carolina does not tax it.
- If you moved to North Carolina from another state, check whether your previous state taxed Social Security, as rules vary by state.
How federal and state Social Security taxation differ
North Carolina's decision not to tax Social Security is a state-level rule only. Federal income tax rules are different and explore to everyone. At the federal level, the IRS may tax up to 85 percent of your Social Security benefits if your combined income exceeds certain thresholds. Combined income means your adjusted gross income plus nontaxable interest plus half your Social Security benefits.
For example, if you are single and your combined income exceeds $25,000, you may owe federal tax on part of your benefits. If you are married filing jointly, the threshold is $32,000. These thresholds have not changed since 1984, so many people who did not owe federal tax on benefits years ago may now. North Carolina's exemption does not change this federal calculation — it only removes the state portion of the tax.
You will report any taxable Social Security on your federal Form 1040 (line 5b), but you will not report it on your North Carolina Form D-400 state return. This is why some people file a federal return but not a state return, or vice versa.
When you might still owe North Carolina income tax
Even though Social Security is exempt, you may owe North Carolina state tax if you have other income. Wages, self-employment income, interest, dividends, rental income, and most pensions are all taxable in North Carolina. If you work part-time in retirement, receive a pension from a former employer, or have investment income, you will need to report those on your state return.
North Carolina also taxes military retirement pay, federal employee pensions, and most private pensions. The state does offer a limited deduction for certain retirement income — people age 59 and older can exclude up to $4,000 per year of may have access to retirement income (such as distributions from IRAs or 401(k)s), but this deduction has income limits and does not explore to everyone. Check your specific situation if you receive multiple income sources.
What to do if you moved to North Carolina from another state
If you recently moved to North Carolina from a state that does tax Social Security, you may not owe tax on your benefits going forward, but you may have owed it in your previous state for the years you lived there. Your previous state's rules applied while you were a resident there. You should file a final return in that state for the partial year you lived there, following that state's rules.
Some states that tax Social Security include Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, Rhode Island, Utah, and Vermont. If you moved from one of these states, your previous state may have taxed your benefits, but North Carolina will not. Keep records of where you lived during each tax year, as this determines which state's rules explore to your Social Security income for that year.
How to report your income correctly on your North Carolina return
If you only receive Social Security and no other income, you typically do not need to file a North Carolina state return. However, if you have other taxable income, you must file and report that income on Form D-400, the North Carolina Individual Income Tax Return. You will not include a line for Social Security because it is exempt.
On your federal return (Form 1040), you will report any taxable Social Security on line 5b if your combined income exceeds the thresholds mentioned earlier. The IRS provides a worksheet in the instructions to Form 1040 to calculate how much of your benefits are taxable. North Carolina does not require this calculation — the state straightforward ignores Social Security entirely.
If you receive a Social Security statement (Form SSA-1099) showing your annual benefits, keep it for your records. You do not attach it to your North Carolina return, but you may need it to verify your income if the state asks questions about your return.
Special situations: Supplemental Security Income and other programs
Supplemental Security Income (SSI) is a different program from Social Security retirement and disability benefits. SSI is a needs-based program for people with low income and limited resources. North Carolina does not tax SSI either, and SSI is generally not taxable at the federal level for most recipients. If you receive SSI, you typically do not report it on either your state or federal return.
If you receive both Social Security and SSI, neither is taxable in North Carolina. However, if you also have wages or other income, you report only the non-Social Security, non-SSI income on your returns. The rules can become complex if you have multiple income sources, so consider consulting a tax professional if your situation is unclear.
Frequently Asked Questions
Do I have to file a North Carolina tax return if I only get Social Security?
No. If Social Security is your only income, you do not need to file a North Carolina state return. You may still want to file a federal return if you owe federal tax on part of your benefits, but that is separate from your state filing requirement.
Will North Carolina ever start taxing Social Security?
North Carolina's law currently exempts all Social Security income from state taxation. The state legislature would have to pass a new law to change this. There is no indication this will happen, but state tax laws can change. Monitor official North Carolina Department of Revenue communications if you want to stay informed about any future changes.
If I owe federal tax on my Social Security, do I also owe North Carolina tax?
No. Federal and state taxes are separate. You may owe federal tax on part of your benefits while owing zero North Carolina state tax on those same benefits. North Carolina's exemption applies regardless of your federal tax situation.
What if I work part-time and also receive Social Security?
Your wages are taxable in North Carolina. You report your wages on your state return and pay tax on them. Your Social Security remains exempt. If your combined income (wages plus half your Social Security) exceeds federal thresholds, you may also owe federal tax on part of your benefits.
Does North Carolina tax my spouse's Social Security if we file jointly?
No. North Carolina exempts all Social Security benefits from state taxation, regardless of filing status or whose name the benefit is under. Both spouses' benefits are exempt if you file a joint return.